Business often needs finance to run the day to day operations, and for future expansions. No matter how healthy and profitable your business is, it might require finance for different purposes. Most of the businesses will opt for business loans and will rely heavily on them. But, most of them don’t know that business line of credit is a much better option than business loans. A business line of credit is much more flexible than the business loans. While business loans are fixed, business lines of credit have a set limit. The best part is you have to pay interest only for the part you have borrowed from the assigned limit, unlike the business loans where you need to pay interest for the complete amount. You can just draw funds from the assigned limit, and repay as per your wish. This is much more convenient for business. The only drawback is one can withdraw funds till the assigned limit. You can compare the business line of credit to credit cards, which has pre-defined limits, and one can avail funds till that limit. So, if you are worried about managing your cash flow, maintaining inventory, unplanned expenses, a business line of credit could be the best option for you.
If it is a new business without any detailed credit history, then you can opt for an unsecured business line of credit. For a new business, it takes some time to build business credit fast. New businesses often end up in securing business loan based on some guarantee, and at a much higher rate. In this case, an unsecured business line of credit could be the best option. In fact, it is a much-required option for the new businesses, as they need finance for business expansions and sometimes even to run the day to day operations. So, if you are an aspiring entrepreneur or a new business owner, you might be often declined business loans without any collateral. In this case, you can simply opt for an unsecured business line of credit without any requirement of collateral. This is also a good option for small businesses. The unsecured business line of credit enables quick money, with a much lower rate of interest. One can get quick funding through this. It would not be wrong to say they it acts as a kind of insurance for the small as well as new enterprises. This definitely has less risk in comparison to the normal business loans. Unsecured business loans operate in the same way as revolving credit. Moreover, you can obtain through an NBC without any minimum FICO score, minimum annual revenue, minimum time in business and more importantly no collateral. However, if the credit score is good, one gets a higher credit limit. But, a definitely good credit score is not a mandatory requirement. As per industry practices, it has been seen most of the lenders prefer credit score of 500 for an unsecured business loan. This varies from one lender to another, and many of them do provide an unsecured business line of credit without any credit score as well. Some of them also prefer an annual revenue of $50,000. But even this is not mandatory as well, and many lenders do lend without considering the annual revenue.
Some of the best business lines of credit providers are, Lending Club, StreetShares, OnDeck, Kabbage and Lendio. Most of them provide credit limit up to $300,000 based on the type of the business, credit score and business performance. Also, all these providers provide an unsecured business line of credit till $100,000 without any form of collateral. You can just check each of these lenders, and select the one which suits your requirement. One should always check if prepayment fees are there or not, along with the repayment period before entering into an agreement with the lender.